Lipid kinases and phosphatases play key roles in cell signaling and regulation, are implicated in many human diseases, and are thus attractive targets for drug development. Currently, no direct in vitro activity assay is available for these important enzymes, which hampers mechanistic studies as well as high-throughput screening of small molecule modulators. Here, we report a highly sensitive and quantitative assay employing a ratiometric fluorescence sensor that directly and specifically monitors the real-time concentration change of a single lipid species. Because of its modular design, the assay system can be applied to a wide variety of lipid kinases and phosphatases, including class I phosphoinositide 3-kinase (PI3K) and phosphatase and tensin homolog (PTEN). When applied to PI3K, the assay provided detailed mechanistic information about the product inhibition and substrate acyl-chain selectivity of PI3K and enabled rapid evaluation of small molecule inhibitors. We also used this assay to quantitatively determine the substrate specificity of PTEN, providing new insight into its physiological function. In summary, we have developed a fluorescence-based real-time assay for PI3K and PTEN that we anticipate could be adapted to measure the activities of other lipid kinases and phosphatases with high sensitivity and accuracy.